FORM OF FIRST AMENDMENT TO
MANAGEMENT RETENTION
AGREEMENT
This AMENDMENT is
made and entered into pursuant to the MANAGEMENT RETENTION
AGREEMENT of
[ ]
(the “Agreement”) by and between 3Com Corporation (the
“Company”) and
[ ]
(“Executive”).
WHEREAS ,
the Company desires to amend the Agreement to comply with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”).
NOW,
THEREFORE, it is hereby agreed that the Agreement is amended in
the following respects, effective as of January 1, 2009, or
such earlier date as required to comply with Code Section 409A
and guidance issued thereunder.
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1.
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Paragraph (a) of Section 3
is replaced with the following:
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“3.
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Change of Control Severance
Benefits .
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(a) Involuntary
Termination other than for Cause, death or Disability or Voluntary
Termination for Good Reason Within Three (3) Months Prior to
or Within Twelve (12) Months Following a Change of Control
. The Executive shall be entitled to receive the severance benefits
provided below if, within three (3) months prior to or within
twelve (12) months following a Change of Control (as defined
herein), the Executive’s employment is terminated
(i) involuntarily by the Company other than for Cause, death
or Disability (as such capitalized terms are defined herein) or
(ii) by the Executive pursuant to a Voluntary Termination for
Good Reason (as defined herein). The Executive’s receipt of
the severance benefits provided below shall be conditioned upon the
Executive’s execution of and compliance with an agreement
(the “Release Agreement”) which shall include, without
limitation, (i) a release of claims against the Company, its
affiliates and representatives; (ii) a non-solicitation
provision prohibiting the Executive’s solicitation of any
Company employee, business opportunity, client, customer, account,
distributor or vendor for a period of one (1) year following
the Executive’s Termination Date; and (iii) a
non-competition provision prohibiting the Executive from directly
or indirectly engaging in, participating in, or having a material
ownership interest in, a business in competition with the Company
for a period of one (1) year following the Executive’s
Termination Date; and (iv) a non-disparagement provision. The
form and language of the Release Agreement shall be determined by
the Company in its sole discretion.
If the Release
Agreement has not been executed and/or the revocation period stated
in the Release Agreement has not expired by the sixtieth (60
th ) day following the Termination Date, severance
benefits shall be forfeited. The Release Agreement shall be
furnished to the Executive in sufficient time to enable the
Executive to comply with the preceding sentence, taking into
account the period of time that the Executive must be given to
consider the terms of the
Release
Agreement under any applicable law. Provided that the Executive has
executed a valid Release Agreement and the applicable revocation
period has expired by the sixtieth (60 th )
day following the Termination Date, Executive will be entitled to
receive the following:
(i) Severance
Payments . One hundred percent (100%) of the Executive’s
Annual Compensation, subject to all applicable taxes and
withholdings, with payment commencing within sixty-five
(65) days after the Executive’s Termination Date in
substantially equal installments corresponding to the
Company’s normal payroll practices and continuing for a
period of twelve (12) months, provided that the Executive
continues to comply with all terms and conditions of the Release
Agreement during the twelve (12) month period. Each payment
shall be considered a separate payment and not part of a series of
installments for purposes of the short-term deferral rules under
Treasury Regulation Section 1.409A-1(b)(4)(i) and the
exemption for involuntary terminations under separation pay plans
under Treasury Regulation Section 1.409A-1(b)(9)(iii). As
a result, the following payments are exempt from the requirements
of Code Section 409A:
(a) payments that
are made by the fifteenth (15 th )
day of the third month of the calendar year following the year of
the Executive’s Termination Date, and
(b) any additional
payments that are made on or before the last day of the second
(2 nd
) calendar year following the year
of the Executive’s Termination Date and that do not exceed
the lesser of two (2) times: (A) the Executive’s
annualized compensation based upon the annual rate of pay for
services provided to the Company for the Executive’s taxable
year that precedes the taxable year in which the Termination Date
occurs (adjusted for any increase during that year that was
expected to continue indefinitely if the Executive’s
employment had not terminated); or (B) the limit under Code
Section 401(a)(17) then in effect.
Notwithstanding
the preceding provisions, to the extent that the payments to be
made during the first six (6) month period following the
Executive’s Termination Date exceed the amounts exempt from
Code Section 409A under this paragraph, such payments shall be
paid in a single lump sum on the first (1 st )
day following the six (6) month anniversary of the
Executive’s Termination Date; and
(ii) Pro-Rated
Bonus Payment . A pro-rated amount of the Executive’s
earned incentive bonus for the bonus period in which the
Termination Date occurs, to be calculated by multiplying the earned
bonus amount (based on the Company’s actual attainment of
applicable performance metrics) by a fraction,
2
the numerator
of which shall be the number of calendar days from the beginning of
the applicable bonus period to the Termination Date and the
denominator of which shall be the number of calendar days within
the applicable bonus period; provided, however, that if a
qualifying termination of employment occurs and the Termination
Date is within three (3) months prior to a Change of Control,
the numerator shall be the number of calendar days from the
beginning of the applicable bonus period to the effective date of
the Change of Control. The pro-rated bonus referenced herein shall
be paid within sixty-five (65) days of the Termination Date
(the payment of which is intended to be exempt from
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code) pursuant to the short-term deferral rules of
Treasury Regulation 1.409A-1(b)(4)).
(iii)
Health, Dental & Vision Benefits . Continuation of
coverage under the Company’s health, dental, and vision
insurance plans (“Health Care Plans”) pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) at the same level of coverage as was provided
to and elected by the Executive as of the Termination Date. If the
Executive timely and properly elects to continue coverage under the
Company’s Health Care Plans in accordance with COBRA, the
Company shall continue to pay the Company-paid portion of the
premiums for the Executive’s elected coverage under the
Health Care Plans until the earlier of: (i) two (2) years
from the Termination Date, or (ii) the date upon which the
Executive becomes eligible for coverage under another
employer’s group health, dental, or vision insurance plan(s).
The Executive will remain obligated to pay the unsubsidized portion
of the applicable premium(s) in order to continue Company-sponsored
coverage. The Company-paid portion of any premium(s) is subject to
change at the Company’s discretion; provided, however, that
the Company-paid portion of the Executive’s premium shall not
be changed to be proportionately less than the Company-paid portion
of the then-current employees. To be eligible for continuation of
coverage under the Health Care Plans, an employee must be actively
enrolled in the applicable Health Care Plan(s) as of the
Termination Date. For purposes of Title X of COBRA, the date of the
“qualifying event” for
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